Why would you accept policy limits for an insurance company?

Posted Wednesday, April 20, 2011 by Ed Harper

I have been asked why would you make a policy limits demand to an at-fault driver when the claim may be worth well in excess of the limits. What the plaintiff’s attorney is trying to do, by only asking for policy limits, and telling the insurance company he would accept this amount, is setting that insurance company up for Bad Faith. That way, if a verdict actually is rendered far in excess of the insurance policy limits, the at-fault insurance company, if they decide not to pay their limits, would be obligated to pay the full verdict, not merely for the limits of your insurance. This way, the burden falls on the insurance company for making a decision which puts your assets at risk.

If you have caused an accident, and one is severely injured as a result, you should contact your insurance company, possibly through a private attorney, and inform your insurance company to settle for your limits. This way, your insurance company is forced to make a decision to settle or face a Bad Faith lawsuit from you if the verdict exceeds your limits.

Additionally, the acceptance of policy limits may open up underinsured motorist coverage from injured person’s own insurance policy. Depending on your jurisdiction, this may only be an option after settling for the limits from the at-fault driver. You should connect with an attorney to discuss the best method to protect yourself in an admitted fault crash.

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